By Josh Kastrinsky, Reporter-Times
jkastrin@reportert.com
Jobs belonging this week to local workers will begin moving overseas in the coming weeks and months, a trend familiar to Indiana industry that has come in an era of the global market.
As part of moves that Harman/Becker Automotive Systems has been considering for "restructuring" for the "long term competitiveness of the company," hourly production line workers will begin losing jobs next week, union representatives said Tuesday.
The German-based car audio system manufacturer has facilities in France, Sweden, Mexico, South Africa, Japan and China.
The loss of 84 jobs is a small move in an economy that boasts more than 21,000 jobs, according to the Indiana Business Research Center and Indiana University, but analysts say small losses can impact an entire economy.
The job cut reported affects less than 20 percent of Harman's 500 employees, which represent close to 2.4 percent of Morgan County's total employment, but such events can have a ripple effect.
Matt Kinghorn, an economic research analyst for the Indiana Business Research Center, said layoffs in one economic center can affect employment in the county's economy. In the case of Harman's 84 reported layoffs, the ripple effect could result in between 40 and 100 additional jobs lost. Using economic modeling software, the IBRC can calculate jobs that will be reduced if unemployed workers stop spending in the county economy, reducing profits in other sectors. The caveat, he said, is that the calculation assumes that all workers live and spend within the county.
Scott Fulford, director of business development for the Indy Partnership, a regional economic development organization, said that job cuts by a major local employer can involve state action.
"It's always a disappointment when a company makes cuts," Fulford said. It's a loss for the company as well as the community, and they're not happy to do it," he said.
When major employers make cutbacks, local economic development representatives can attempt to work with the company to limit the job loss, he said. In many cases, job loss is just the reality of business.
"They're at the mercy of the market and competition," he said. "There's nothing incentive-wise you can do to make an unprofitable company profitable. The free market works for the best most times, but it can be for the bad sometimes as well."
The state can offer assistance to companies, Fulford said, such as financial assistance for training and tax credit programs. If layoffs occur, both the Indiana Economic Development Corp. and the Indiana Department of Workforce Development can help the unemployed with resumes and match employers to qualified candidates.
"They have to ask the question, 'Can we win this war?'" he said. "The tax money has to be spent in the right place."
In the wake of a mass layoff, county economic development representatives should evaluate the workforce and available facilities and determine what is marketable, he said. Markets have benefited from major distribution centers, but Fulford said production jobs provide tax incentives that are rarely matched.
Production jobs are major draws for communities because they are large employers and have taxable infrastructure, he said, and often pay higher average wages.
"It's better than an empty field that has only one employee, a farmer or a parking lot attendant," he said of the taxes earned on developed land. "A building provides a tax base."
Several communities have been hit hard by industry downsizing and relocation, he said, including Grant and Madison counties, which lost General Motors facilities. Legislation has been enacted in recent years to retain jobs and attract more manufacturers, Fulford said, such as tax abatements for infrastructure within facilities and elimination of inventory taxes.
The global market has been a factor in much of the industry relocation, he said, and is a reality in the world of multinational companies. Production jobs that left the Midwest for southern states then moved to Mexico, Fulford said, and more jobs are being moved to Asia.
"It's painful for the people involved and for the communities, but low-skill jobs are going away from these towns," he said. "We have to look at the assets we do have, whether it be tourism or life sciences. It all keys around education and training."